Legislative audit finds it’s hard to tell if state tax incentives are working

A legislative audit of two Nebraska tax incentive programs recommends the need for more data.

The Nebraska Advantage Research & Development tax incentive and Nebraska Advantage Rural Development tax incentive were reviewed.

State Senator John Kuehn says the findings show the Legislature needs to be able to gather more information in order to answer questions about how incentives work.

“We don’t have really good definitions in statutes,” Kuehn tells Nebraska Radio Network, “and the reporting requirements for a number of the companies participating in the incentive programs don’t require them to submit the information that we might need to be able to evaluate those specific questions.”

Kuehn, who chairs the Legislature’s Performance Audit Committee, says state law needs to spell out the goals of tax incentive programs and companies have to report meaningful data so programs can be evaluated.

“For example, there’s discussion about what is this doing to reverse the phenomena of brain drain,” Kuehn explains. “Well, we don’t have a really good series of metrics in terms of determining based on reported requirements of how many college-educated individuals are leaving the state.”

Keen wants future tax incentives to have Performance Statements that would detail the specific goals a tax incentive is intended to accomplish, and what constitutes success or failure.

“Individual lawmakers can look at this and say, from their own ideological perspective, whether or not the price tag, in terms of foregone revenue, is worth it,” Kuehn points out, “but as far as a concrete, definitive answer, with the current data that is reported, we can’t answer it one way or another.”